Cosmosteel

Cosmosteel: Proposed to issue 26.4m new shares at $0.58 apiece to Hanwa, a Japanese-listed steel trading company which also has dealings in other metals, food products, petroleum & chemicals, lumber and machinery. In addition, director and majority shareholder, Ong Chin Sum, has also agreed to sell his entire 21.3% stake (56.2m shares) to Hanwa at the same price. On completion, Hanwa will become the largest shareholder of Cosmosteel with a 28.5% stake - just shy of the 30% level that will require Hanwa to launch a mandatory offer for the remaining shares, under SGX rules. Hanwa has given its undertaking not to sell any of its shares within a two-year period upon the deal completion date. Subsequently, both Cosmosteel and Hanwa will enter into a strategic alliance to cooperate to create synergies, as well as to promote sales efforts on each companies' products. At the placement price of $0.58/share, Cosmosteel will be valued at a proforma FY9/14 P/B of 1.4x and 30.4x P/E. Cosmosteel shares last traded at $0.42.